Options Trading News

The bulls want to feast on BRF, a Brazilian food company with explosive growth prospects.

optionMONSTER's Heat Seeker monitoring program detected the purchase of about 9,000 June 22.50 calls in volume far above previous open interest of just 226 contracts, clearly indicating new activity. Most of the large blocks priced for $1.60 to $1.70.

These long calls lock in the price where a stock can be bought, letting investors cheaply position for a move higher. They also have the potential to generate significant leverage if a rally ensues. For instance, a gain of just 20 percent in the stock price would roughly double their initial outlay. (See our Education section)

BRFS rose 3.41 percent to $21.86 yesterday but is down 16 percent in the last three months. The company's profit has climbed more than 200 percent in the last year and is expected to keep growing at a 51 percent clip in 2014 as new products drive results.

The stock also made a higher low this month compared with the level where it troughed in June, which could make some chart watchers think that it's in a bullish uptrend.

Total option volume was more than 200 times greater than average in the session, according to the Heat Seeker. Calls outnumbered puts by a similar ratio.

So far, my articles have taken you through a logical progression of option theory and fundamental concepts of options. As of yet, I have not mentioned a single strategy and for a good reason! The actual application of a strategy should come AFTER you learn about the option product itself.

optionMONSTER® provides stock market insight, advanced options education, and actionable trade ideas to meet the needs of do-it-yourself investors. After spending decades in the trading pits of Chicago, Jon 'DRJ' and Pete Najarian founded the company in 2005 to help people better manage their own investment portfolios.

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